The Commonwealth Blog

Wednesday, February 26, 2020

Is Real Estate Investment for You?

Real estate investment is so popular because it tends to offer reliable returns over time. According to the U.S. Federal Reserve Bank, the average price of homes in the United States has risen steadily for the last 60 years, except during a few economic downturns. In addition, there are many ways to invest in real estate:

Rentals: Real estate investing is a long-term game. When you own a rental, you’ll have a steady source of income while you wait for your property’s value to appreciate.

House Flips: If you'd rather have a more immediate return on your investment, you might consider flipping houses. This strategy involves buying inexpensive, often run-down houses, renovating them to improve their value, and selling them at a profit as soon as possible.

Ask the Right Questions

Despite the potential for safe returns in the long run, real estate investing isn’t a good choice for everyone. Before you invest, make sure you're ready by asking yourself these three questions:

Do I Have the Skills for Real Estate Investment? Most successful real estate investors have a similar set of skills. They’ve learned how to monitor the real estate market and understand it well enough to know the best time to invest. In addition, homes need regular upkeep and maintenance. Even if you are planning to do all the work yourself, you will deal with subcontractors regularly—this takes management skills.

Am I in a Strong Market? Every successful real estate investor knows when to get out of a bad market. Before you decide you invest, make sure the market you’re looking in is headed up, not down. It’s usually wise to invest in the same market where you live unless you are extremely familiar with the another one and visit it regularly.

Can I Afford to Lose My Money? Every investment is a risk. Even when you've done all your homework, unexpected circumstances can ruin your investment overnight. If this will put you and your family at risk, you're better off keeping your money and staying out of the market.

Real estate investment can be an exciting, lucrative activity. Some people even turn their real estate investment hobby into a full-time job. Is real estate investing right for you? These questions can help you find out.


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